MPs back tighter data centre regulations but raise questions on competitiveness, sustainability
A law was passed in parliament requiring operators of data centres in Singapore with a critical IT load of at least 3 megawatts to be licensed.
Empyrion DC says its facility in Singapore has an external wall with green plants to improve energy efficiency. (Image: Seraya Partners)
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SINGAPORE: Members of Parliament (MPs) supported new regulations for data centres under a new law passed in parliament on Wednesday (Oct 7), but raised concerns about the sector’s competitiveness and sustainability.
The Digital Infrastructure Bill introduced two new licensing regimes to strengthen the security and resilience of major cloud services and data centres, as well as the environmental sustainability of their operations in Singapore.
Nineteen MPs debated the issue during the second reading of the Bill, which lasted over five hours across two days.
In his closing speech, Senior Minister of State for Digital Development and Information Tan Kiat How said MPs raised practical questions on competitiveness, sustainability, scarce resources, jobs and skills, as well as the need for secure and resilient infrastructure. He said the debate reinforced three broad principles.
These were that Singapore should plan ahead instead of waiting for serious disruptions or acute resource pressures, that data centre capacity should grow in a disciplined manner, and that clear and proportionate regulation is not the opposite of competitiveness.
“Singapore needs more compute as our economy digitalises and AI becomes more widely used, but land, power, water, and our carbon budget are finite,” Mr Tan said.
“Our objective cannot simply be more capacity; it must be greater value from the capacity that we host.”
The new law aims to strengthen the foundations of Singapore’s digital economy and provide regulatory clarity to support long-term infrastructure investment in Singapore.
Operators of data centres in Singapore with a critical IT load of at least 3 megawatts (MW) will need to be licensed.
Both existing and new data centres will be required to meet facility-level energy-efficiency requirements, including power usage effectiveness requirements, as a first step.
Further requirements, including for IT equipment and water efficiency, could be introduced in the future.
A licensing regime will also be introduced for major co-location and cloud data centres with a critical IT load of at least 10MW, as well as major cloud service providers whose Infrastructure-as-a-Service and Platform-as-a-Service services generate at least S$100 million (US$78.2 million) in average annual revenue from users in Singapore over the three preceding years.
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43:20 Min Two licensing regimes – one for security and resilience of foundational digital infrastructure services, namely major data centres (DCs) and cloud services, and another for the environmental sustainability of DCs. They aim to give the Infocomm Media Development Authority the tools to be an effective gatekeeper and standards-setter. In security and resilience, the government is targeting the underlying infrastructure whose disruption could affect many businesses and organisations at the same time. It will start with two types of services – major DC facility services with a critical IT load (CIL) of at least 10 megawatts, and major regulated cloud computing services that generate at least S$100 million in average annual revenue from users in Singapore over the preceding three years and provide either Infrastructure-as-a-Service or Platform-as-a-Service. As for environmental sustainability, the licensing regime will apply to operators of DCs in Singapore with a CIL of at least three megawatts, roughly the power demand of a major suburban mall. The maximum financial penalty for most breaches is S$1 million or 10 per cent of the licensee’s annual turnover in Singapore, whichever is higher. Senior Minister of State for Digital Development and Information Tan Kiat How, who outlined the amendments in parliament on Tuesday (Oct 6), said the government’s ambition is not maximum compute but “maximum value from compute” for Singapore, businesses and its people.
CONCERNS ABOUT COMPETITIVENESS
While supportive of the new regulations, MPs said they should not come at the expense of Singapore’s competitiveness.
MP Sharael Taha (PAP-Pasir Ris-Changi) said regulation should raise standards without making Singapore uncompetitive.
The question was not simply about how data centres are regulated, but how Singapore is positioning itself for the next phase of the AI economy and ensuring that “every megawatt of scarce energy we commit creates the greatest possible economic and strategic value”, said Mr Taha.
With its limited resources, Singapore’s objective cannot be “unlimited growth” of data centres, he said.
“Neither should the answer be to constrain growth to the point where the next generation of AI infrastructure simply goes elsewhere,” he said.
He asked whether the government has assessed the cost per megawatt of compliance, particularly for existing data centres and how this compares with regional competitors.
15:33 Min Security, resilience and sustainability are necessary foundations for Singapore’s digital economy, said MP Sharael Taha. Regulation is only one side of the equation; the other is ambition, he said. Speaking in parliament on Tuesday (Oct 6), he stressed the need to regulate data centres to be more efficient and resilient, as well as demand that scarce resources are used responsibly. At the same time, the government must create the conditions for Singapore to capture the next generation of cloud compute and AI investments in a balanced way, he said. The challenge is to achieve intelligent growth, as well as more compute and economic value and greater strategic capability from every unit of scarce energy, he added.
MP Edward Chia (PAP-Holland-Bukit Timah) said higher standards could be a competitive advantage for Singapore rather than a regulatory cost.
He said that companies handling critical workloads would value resilient infrastructure, while those making substantial, long-term investments would value regulatory consistency.
“Singapore need not compete on price alone. Our competitive proposition should be to offer trusted, resilient, connected, and resource-efficient compute, supported by a predictable regulatory environment,” Mr Chia said.
Responding to the MPs, Mr Tan said the cost mattered, but Singapore does not compete on the basis of having the cheapest land or electricity, as other markets have more of both.
“Singapore’s role is different. It is a trusted, connected, and high-value hub for workloads where reliability, security, resilience, connectivity, and proximity to enterprise activities matter more. That means we do not need to host every megawatt. We need to host the right capacity, and make the capacity we host work harder for Singapore,” Mr Tan said.
He pointed out that Singapore received more than 20 applications in its recent data centre call for applications exercise, showing that operators continue to see Singapore as a key part of their regional strategy.
He agreed with Mr Chia’s observation that regulatory quality could be Singapore’s competitive edge.
“Good regulation is not about having the most rules; it is about having the right rules applied predictably,” Mr Tan said.
“We are setting a clear floor, and making sure those covered by the regime meet it, and raise that floor over time when it is practical and necessary.”
He added that the government intended to minimise the administrative burden on service providers and operators by streamlining operational processes for those covered under the Bill.
15:42 Min Countries and corporations worldwide are scrambling to meet AI-driven demand for data centre capacity, but we need to ask if this arms race compromises our ability to meet our climate targets, said MP He Ting Ru. In parliament on Tuesday (Oct 6), she said Singapore must lead by example in driving sustainable, responsible and people-centric technological growth. Its approach to data centres has to prioritise its people’s needs, mitigate the socioeconomic impact and boost transparency on emissions. Ms He spoke about the toll exacted by data centres on electricity and water grids, and on another scarce resource in Singapore – land. She asked how the government will take public feedback into account in deciding whether and where to build data centres. Singapore should also aim to mitigate the effects its data centre policies have beyond its shores, she added.
LIMITED RESOURCES FOR DATA CENTRES
MPs broadly agreed that data centres use significant amounts of land, water and power – resources that are limited in Singapore.
They questioned whether Singapore has enough low-carbon electricity to support the further growth of data centres, and whether expansion could put additional pressure on the national grid.
Several asked if the strain on the national grid could raise electricity costs for households.
MP He Ting Ru (WP-Sengkang) said future data centre capacity should only be introduced if the grid infrastructure could support the additional energy usage comfortably, and that the “cost of upgrades required, if any, should not be borne by consumers”.
Similarly, MP Louis Chua (WP-Sengkang) asked how much the 60 per cent increase in data centre capacity over the last four years had contributed to electricity prices.
06:58 Min The Digital Infrastructure Bill will help maintain Singapore as a digital hub that is trusted, resilient and resource responsible, said MP Choo Pei Ling. Speaking in parliament on Wednesday (Oct 7), she highlighted three goals – resilience, sustainability and value. On resilience, she wanted to know if the authorities would consider a risk-based cross-sectoral exercise programme. Turning to sustainability, she suggested a public scorecard on what operators control. On value, she suggested publishing a standard framework tracking the types of commitment made and complied with.
In response, Mr Tan said that in Singapore, data centres do not buy electricity at the regulated household tariff, but from retailers at commercial rates or directly from the wholesale electricity market. Data centres also pay for their own dedicated grid connections.
“The household tariff is driven mainly by fuel and electricity generation costs, and the growth of data centres is not expected to raise this cost,” Mr Tan said.
“As overall electricity demand grows, the grid may need to be expanded or reinforced. These system-level upgrades benefit the reliability and resilience of the entire grid, and their costs are shared across users through the existing grid charging framework.”
In response to questions about whether data centre capacity will be capped, Mr Tan said it was not sensible to place an “arbitrary cap”.
“Doing so would mean constraining the growth of our broader economy and use of digital technologies in society that benefits all Singaporeans,” Mr Tan said.
MPs such as Mr Chua called for publication of Power Usage Effectiveness (PUE) and Water Usage Effectiveness (WUE) figures at facility or operator levels, as well as annual aggregate electricity and water consumption, while MP Choo Pei Ling (PAP-Chua Chu Kang) proposed a progressively introduced public scorecard covering PUE and WUE.
Mr Tan said operators can tap existing schemes to improve energy efficiency, such as the Economic Development Board’s Resource Efficiency Grant for Emissions, which offsets the cost of upgrading to more energy-efficient equipment.
He noted that Singapore is among the few countries in the world to set a water efficiency target for data centres.
On the sector’s electricity and water use, he said the Energy Market Authority reports the electricity consumption by sector, including the information and communication sector, which covers data centres.
National water agency PUB also publishes the water efficiency benchmark for data centres, he said.
“The relevant agencies will consider what further sector-level information can usefully be made available without disclosing commercially sensitive information,” he added.
01:09:32 Min In parliament on Wednesday (Oct 7), Senior Minister of State for Digital Development and Information Tan Kiat How responded to clarifications sought by Members of the House on the Digital Infrastructure Bill. The Bill was then passed.
SECURITY AND RESILIENCE
Dr Choo, MP Yip Hon Weng (PAP-Yio Chu Kang) and MP Victor Lye (PAP-Ang Mo Kio) said that even if individual providers had sound resilience plans, services could still fail if they depended on the same underlying infrastructure.
“Banks, clinics, and government services can each comply and still depend on the same cloud provider, substation, cooling station, cooling system, or cable route. Engineers call this common mode failure. There is a shared point of failure,” Dr Choo said.
She pointed out that a smaller facility, including one under the 10MW threshold, could still be tasked to perform a critical function.
She asked if the Infocomm Media Development Authority (IMDA) would assess factors such as substitutability, concentration of users and cross-border dependence.
Mr Yip said that an individual provider could have a good recovery plan but still depend on a shared facility, power supply, connectivity pathway or operational team.
If the shared dependency failed, multiple providers could fail simultaneously, he said.
He proposed joint recovery exercises for major foundational digital infrastructure licensees with shared dependencies.
“These exercises should test whether essential services can resume within recovery timeframes (appropriate) to the likely harm caused by disruption. They should involve the relevant sector regulators and, where necessary, critical upstream operators,” he said.
Mr Tan said that the Bill gives the government visibility across major providers.
“A single operator sees its own incident. The regulator needs to see the whole system. This helps us identify common dependencies and patterns that no individual operator may be able to see,” he said.
IMDA, as the sector regulator, works closely with national agencies such as the National Security Coordination Secretariat on interdependency matters, he added.
“The Bill gives IMDA powers to set up business continuity, disaster recovery, and incident reporting requirements.”
Source: CNA/wt(mi)
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